Being an entrepreneur is an exciting way of life. Entrepreneurs are thrill seekers and look for ways to challenge themselves to grow as a business person as well as expand their business in profit, locations, and clientele. Even though this growth can be exciting, it can also be the best direction to take a business. It allows for a business to thrive and increase their brand recognition, offers a better service and product, and obtain a larger geographical market. When a business expands, they have an opportunity to dominate a market niche and reach economies of scale. Economies of scale allow for bigger businesses to have lower costs per unit and this, in turn, gives a larger fund to administration purposes like training employees and gaining new technology.
Risks of Expanding
Like anything you do in life, risks are always involved and can have a large impact on you or your business. Of course, expanding your business has risks or everyone who has opened a business would be trying to expand. The great part about risks is that you can study them and try to work around them by finding solutions. This puts you a step ahead when expanding because you can look at what others have done and learn from them and this can give you confidence for the future of your expansion. When looking at risks, it makes you plan and focus on the future of what your company could be. You must create detailed outlines of risks and outlines of the solutions. It keeps you organized and helps you stay on task when expanding. Even though you may organize, risks will still be very prevalent when expanding. To manage these risks, there are three easy steps to help lower the number of risks that may appear.
The first is once you have organized to stop risks, do your research. You’ll want to ask people what they want to see from you and if they have any input. Ask other businesses about their expansion to get an idea of how certain things will work. Also, read up on past expansion problems, and how they were worked around so they will not be a problem. The second is to find a trusted person to act as your advisor, or second hand. You will want someone who can help you with your decision-making process, as well as help you navigate through the expansion process. They will be able to help you to ask the right questions, and get the answers you want to hear. The last thing to do is implement the strategies you know are effective. You started your business, and it grew, now you have hit a plateau, but you can still implement old strategies on a larger scale to get where you want to go.
There are many different strategies an entrepreneur could use to expand their business, but some of the top strategies are: increase your sales, market segmentation, and partnerships. Of course, increasing your sales seems obvious and easy but it is important to do it the right way and use the resources you already have in place. This may mean you must change your marketing strategy or use a larger location, but it will be your existing customer base you already have. Other ways to increase sales is to develop a competitive advantage, use content and social media marketing, and increasing your sales force. The next strategy is Market Segmentation. Market segmentation to many is a scary thing because people feel that you lose a lot of the market, but being able to focus on one part of the market allows you to focus on an exact customer and create a great start for growth. Market segmentation allows for companies to increase its competitiveness and customer retention and overall will increase the profit. The last strategy is creating a partnership. Partnerships allow businesses to use their resources to their advantage to compete with the larger companies. Let’s say that your company manufactures and sells baseball bats. With your technology used in creating these bats, your bats create more force and to not get worn down as quickly over time. The only problem is that you do not have a large manufacturing facility. You could partner with a baseball bat factory and wouldn’t have to pay any money for your own facility. You would just have to pay a profit of every baseball bat you sell back to the factory. This allows for you to get high dollar production and distribution but won’t have to spend money on your own facility.
Of these three main strategies above, there are many more that fall into these as subcategories. For example, to create a partnership to expand, one could also create an acquisition with another company. An acquisition is a process of a company buying most, if not all, of another company’s business to take control of. This will allow that business to gain cost reductions, greater market share, as well as have the opportunity to expand overseas.